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Two Big Plays Emerge in B.C., Setting The Stage For A Summer To Remember

The Dramatic New Chase For A Nickel-Copper-Rich Massive Sulphide Deposit In The Heart Of A Famous Gold Camp

Northern Ontario Cobalt Junior Attracts Interest From Metal Trading Companies

The Most Important Venture Development Since The New Bull Market Began

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December 17, 2019

7 @ 7:00

Visit the BMR comments section throughout the day for updates and helpful information!

1. Gold has traded between $1,474 and $1,481 so far today…as of 7:00 am Pacific the yellow metal is unchanged at $1,476…Gold’s nearest resistance is in the high $1,480’s followed by $1,500…Silver is off a penny at $17.01…Nickel is 2 cents lower at $6.35, Copper is flat at $2.80 while Zinc is a penny higher a $1.04…U.S. investment bank Morgan Stanley is building up its base metals trading business after abandoning it 4 years ago, according to a Reuters report this morning…the move comes as rising volumes and volatility in industrial metals have boosted revenues for investment banks after years of lackluster market conditions…Crude Oil (WTI) is trying to gain traction above $60 a barrel…it’s up 44 cents to $60.65…the U.S. Dollar Index has rebounded one-fifth of a point to 97.20…on the data front this morning, U.S. manufacturing output rebounded more than expected in November…a just-released Bank of America survey among fund managers shows cash allocations have fallen to 4.2% of portfolios, the lowest level since March 2013…BofA’s “Bull and Bear” reading rose to its most bullish level since April 2018…also, the global economic backdrop no longer looks so scary – a net 29% of those surveyed see growth improving over the next 12 months, a dramatic turnaround from a net minus 50% in June and a record swing for a 2-month period…a net 68% say a recession is unlikely in 2020, which is the biggest 2-month swing back to May 2009 just as the Great Recession was coming to an end…respondents reported being a net 31% overweight, the highest level of the year, though the allocation level is just above its long-term average, indicating that sentiment has not gotten overheated yet…

2. Scarce Palladium briefly breached the $2,000 an ounce level for the first time this morning, before correcting, as a Phase 1 U.S.-China trade deal drives prospects of a pick-up in demand in 2020…Palladium touched $2,006 before reversing in a much-needed pullback to unwind temporarily overbought technical conditions…it’s now off $44 an ounce at $1,916…“Supply is tight in the Palladium market and when you’re adding the speculation about a potential pick-up in demand due to recovery in the global economy, you have a perfect storm of bullish news continuing to keep it supported,” Saxo Bank analyst Ole Hansen said…however, he added, “Liquidity is poor, which means that a correction can be quite brutal and could take Palladium back down towards $1,850″…Palladium, used mainly in vehicle catalytic converters, has gained more than 50% this year because of a sustained supply crunch…

3. Canadians have put amateurs in charge of their hard-earned tax dollars in Ottawa: Less than 2 months after getting re-elected with a minority government, propped up the even more economically illiterate NDP and Bloc, the Trudeau Liberals admitted yesterday that Canada’s federal budget deficit will be billions of dollars deeper than it was supposed to be this year and next, according to Finance Department figures…the budget is now so stained with red ink, with little to show for it, that it’ll likely increase pressure on the Bank of Canada to lower interest rates, especially in the event of a downtown…the projected deficit of $19.8 billion for the 12-month period that ends in March is now slated to hit $26.6 billion…that’s a $7 billion miss and it comes with investment and growth statistics that lag far behind those in the United States under Trump administration policies….Canada’s federal government is smothering the private sector, harming the resource sector and driving investment dollars to the U.S. and elsewhere…perhaps the most dispiriting graph in the new fiscal update charts real business investment…it shows that investment in Canada has fallen 10% in the past 4 years, even as business spending in competitor countries like the U.S., the U.K. and Germany has risen by a similar amount…the Trudeau budget deficit – just like like his father’s – is also structural and that means it’ll get much worse in the event of a significant Canada-made economic downtown that may already have started…

4. Great Bear Resources (GBR, TSX-V) continues to deliver impressive high-grade intercepts in its fully financed 200,000-m drill program at its 100%-owned Dixie Project in the Red Lake district of Ontario…highlights of yesterday’s fresh results from along the LP fault target included 16.8 g/t over 4.15 m (55 m to 59.15 m) in the new Gap zone, located between the Bear-Rimini and Yuma zones, and 48.7 g/t Au over 8.7 m (251.6 m to 260.3 m), including 241.9 g/t over 1.2 m, in the Auro zone…President and CEO Chris Taylor stated, “With the discovery of high-grade Gold mineralization in the new Gap area, the last significant undrilled segment of the LP fault between the Bear-Rimini and Viggo zones is being successfully filled. Remarkably, all (100%) of the drill holes completed into the LP fault structure to date have intersected similar Gold mineralization and host geology. Results continue to support continuity of Gold mineralization along more than 4 km, which remains open along strike and at depth. Our drilling strategy for 2020 is 3-fold: 1) We plan to continue the discovery process through drill testing of new targets across the project; 2) We plan to continue significant step-out drilling over 12 km of the 18-km LP fault; and 3) We will undertake concurrent closely spaced drilling in areas where we have already successfully intersected Gold“…GBR has jumped another 23 cents to $8.05 as of 7:00 am Pacific…

5. The Dow is up slightly through the first 30 minutes of trading…U.S. markets hit fresh record highs this morning and are aiming for their 5th straight winning session as a so-called Phase 1 trade deal between China and the U.S. clears the path higher for stocks to end a banner year…in Toronto, the TSX is up 8 points with the Gold Index steady at 247…Kirkland Lake Gold (KL, TSX; NYSE) has announced that it will pay a quarterly dividend of 6 U.S. cents per common share on January 13, 2020 to shareholders of record as of the close of business on December 31…the 6-cent U.S. per common share payment is 50% higher than the previous quarterly dividend payment of 4 U.S. cents per common share paid in mid-October and represents the 11th quarterly dividend payment made to shareholders following the company’s adoption of a dividend policy in March 2017…Matt Halliday, who has come over from Kirkland Lake Gold where he was a resource geologist, has officially started as Canada Cobalt’s (CCW, TSX-V) VP-Exploration in the midst of an exciting new discovery at CCW’s Castle Property in the Gowganda Camp…“In a past producing Camp like this, there’s no reason why there can’t be a 4th, 5th or 6th deposit,” explained Halliday…“I couldn’t be more excited about this unique opportunity. And it’s not just about high-grade Silver and Cobalt. We’re looking at something on the Gold side as well”…rush assays from the first wedge hole completed at the Robinson Zone Discovery (massive native Silver) are imminent as drilling of new holes from surface ramps up into Christmas…crews will have a very short holiday break before drilling resumes during the 1st week of January…much more is also on Halliday’s plate including underground drilling at the Castle mine and the PolyMet acquisition deal, expected to close any day now…CCW has hit 54 cents in early trading as it approaches a new 52-week high…Balmoral Resources (BAR, TSX) is raising another $4.5 million in a Quebec flow-through PP at 51 cents per share…BAR is up 1.5 cents at 35 cents…neighbor Wallbridge Mining (WM, TSX) has added a penny to 84 cents…key resistance for WM is in the low-to-mid 80’s…Score Media & Gaming (SCR, TSX-V), also looking strong going into year-end, is up 4 pennies at 73 cents in early trading…

6. Seabridge Gold (SEA, TSX) announced this morning that its search for large new porphyry targets within the KSM mining district has identified 4 prospects with signatures matching the established deposits where reserves and resources have been delineated…these new targets are under the Sulphurets Thrust Fault (STF) and are therefore ‘blind’, unlike the known deposits which were exposed at surface by erosion…notably, the company is inviting a new player(s) into the Eskay Camp to pursue these targets…Seabridge Chairman and CEO Rudi Fronk explained, “These are not targets we intend to drill any time soon. We think this data will be valuable to a joint venture partner. We had 3 objectives: 1) Use our extensive array of knowledge accumulated over the past decade to demonstrate that we have not exhausted the exploration potential for KSM; 2) Assess the exploration potential of areas currently proposed project infrastructure; and 3) Better define the characterization of waste materials. We believe these new targets could contribute to the multi-generational life of the KSM Mining District while the data we generated also provides insights to help optimize site development”…

7. Like Barrick (ABX, TSX; GOLD, NYSE) before it, Newmont Goldcorp (NGT, TSX; NEM, NYSE) has exited Kalgoorlie Consolidated Gold Mines (KCGM) and sold its 50% stake to Australia’s Northern Star Resources (NST, ASX)…Barrick dropped its 50% stake in Kalgoorlie in August, netting $750 million for half of the mine…Newmont has been shedding assets to streamline operations while also using its bigger piles of cash to buy back its shares…“Combined with the previously announced agreements to sell Red Lake in Canada for $375 million and Newmont’s stake in Continental Gold for $260 million, the company has meaningfully exceeded market expectations, with more than $1.4 billion in fair value cash transactions announced over the past month,” stated President and CEO Tom Palmer…“Building on Newmont’s recently announced $1 billion share repurchase program, Northern Star’s all-cash offer supports Newmont’s disciplined approach to capital allocation, which includes strategically reinvesting in the business, strengthening the company’s investment-grade balance sheet and returning capital to shareholders. The sale of KCGM also further streamlines Newmont’s portfolio, with 12 top-tier assets located on 4 continents in the world’s most favorable Gold mining jurisdictions”…

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Comments (6)

December 16, 2019

7 @ 7:00

Visit the BMR comments section today for updates and helpful information!

1. Gold has traded between $1,474 and $1,481 so far today…as of 7:00 am Pacific the yellow metal is up $2 an ounce at $1,478…Gold’s nearest resistance is in the high $1,480’s followed by $1,500…Gold equities continue to point to higher Gold prices going into year-end…since December 3, the yellow metal has briefly traded above resistance at its 50-day moving average in the upper $1,480’s on only a couple of occasions and has closed below that SMA for the last 9 trading days…Goldman Sachs correctly describes Gold as “resilient”, commenting: “In our view, this is due to support from a weaker dollar as well as persistent concerns over late-cycle low global growth. Political risks also remain elevated with U.S. election next year and trade disputes not yet fully settled. Further, the demand from central banks remains strong, driven by de-dollarization, and is on course for 750t (tons) which represents 22% of global supplies, the highest since the Nixon era”…Silver is up 7 cents at $16.99…Palladium continues to run, up another $34 an ounce at $1,949…Copper and Nickel have both added 3 cents to $2.80 and $6.35, respectively, while Zinc is a penny higher at $1.03…it has been over a decade since the U.S. opened a new Copper mine…Nevada Copper (NCU, TSX) announced this morning that its Pumpkin Hollow operation is now processing Copper out of its underground mine near Yerington, Nevada…expected production is 65 million pounds of annual Copper equivalent…Crude Oil (WTI) remains slightly above $60 a barrel, up 12 cents at $60.19, while the struggling Dollar Index is off marginally at 97.10...more encouraging U.S. economic figures released this morning…data from IHS Markit shows that U.S. business activity hit a 5-month high in December, while U.S. homebuilder confidence has jumped to its best level in 20 years…

2. The pickup in China’s economy in November adds to the optimism from the trade deal announced late last week, though plenty of downside risks remain as the nation heads into 2020…industrial output and private consumption were both much stronger than expected, with production jumping 6.2% from a year earlier and retail sales climbing 8%, data released today showed…at the same time, fixed-asset investment in the first 11 months of this year grew at 5.2%, the slowest pace since at least 1998…if the trade deal is signed early next year as the U.S. has indicated and tariffs on some Chinese goods are lifted, it would go some way to dispel some of the uncertainty that has been hanging over the economy…domestically, policy makers still face questions about the sustainability of debt and rising defaults, but the government has emphasized policy stability and there is little chance of a change until at least March next year when authorities meet to approve 2020’s broad policy guidelines…economists from UBS AG and Oxford Economics Ltd. have upgraded their forecast for China’s GDP growth in 2020 to 6% from 5.7% after the Phase 1 trade deal was announced, while saying uncertainties will linger…

3. Canada’s Equinox Gold (EQX, TSX) is buying rival Leagold Mining (LMC, TSX) for $769.3 million (CND) in an all-stock transaction, the latest consolidation in the industry that has seen deals worth more than $30 billion (U.S.) so far this year…the offer, which implies a no-premium consideration of $2.70 per share, will create one of the world’s largest Gold companies operating entirely in the Americas…the combined entity, which is forecast to have Gold production of 700,000 ounces in 2020, increasing to 1 million ounces annualized production during 2021 and beyond, will continue as Equinox Gold and be headquartered in Vancouver…Equinox will have a diversified operating platform with 6 operating mines in the United States, Mexico and Brazil…the deal comes concurrently with a $670 million (U.S.) financing package – an at-the-market $40 million equity investment from Ross Beaty, a new $130 million convertible debenture issued to Mubadla Investment Company, and $500 million in underwritten commitments from a syndicate of lenders to refinance existing credit facilities…the board of directors, led by Beaty as Chairman, will have 8 members, 4 from each company…the management team will be led by Neil Woodyer as CEO…Leagold shareholders will receive 0.331 of an Equinox Gold share for each Leagold share held…this implies at-market consideration of $2.70 per Leagold common share, using closing prices for both Equinox and Leagold common shares on the TSX last Friday…at closing, existing Equinox and Leagold shareholders will own approximately 55% and 45% of the merged company, respectively, on an issued share basis…Ross Beaty stated, “In addition to having strong financial and operating metrics, our large scale will provide improved liquidity, greater asset and country diversification and a lower-risk profile for all shareholders. This is the kind of Gold company investors want today and I’m very pleased we are combining forces to achieve it”…

4. The Dow is up 163 points through the first 30 minutes of trading…U.S. markets hit fresh record highs this morning and are on pace for their 4th straight winning session as a so-called Phase 1 trade deal between China and the U.S. clears the path higher for stocks to end a banner year…in Toronto, the TSX is up 48 points with the Gold Index off slightly at 250…Yamana Gold (YRI, TSX; AUY, NYSE) has increased its dividend again…all technical indicators suggest the Gold Index will soon break out powerfully from that key resistance level…the Venture is 2 points higher at 542 as it begins to push through the important 540 area…Great Bear Resources (GBR, TSX-V) was halted pre-market, pending news…Canada Cobalt (CCW, TSX-V) is charging toward a new 52-week high after drilling into spectacular visual mineralization (native Silver plus Cobalt) just 750 m east of the old workings of the Siscoe (O’Brien) mine that churned out 41 million ounces of rich Silver in Northern Ontario’s prolific Gowganda Camp…drilling continues and rush assays from the first hole are possible later this week or immediately prior to Christmas…oldtimers, focused on the low-hanging fruit at the Castle, Capitol and Siscoe mines on the western margin of the Nipissing diabase, may have missed the “motherlode” in this Camp less than 1 km to the under-explored east…one only has to look at the Macassa Gold mine at Kirkland Lake, just an hour’s drive from Gowganda, as an example of such a near miss…Macassa was mined for 7 decades before the very rich South Mine Complex was first discovered a short distance away in 2005…as the saying goes, the best place to find a new mine is near an old mine…CCW’s find could be the most significant grassroots discovery in the Northern Ontario Silver-Cobalt District in 4 decades…CCW is also on the verge of closing its acquisition of the PolyMet processing facility in the town of Cobalt…the stock is up 4 pennies at 48 cents in early trading, a fresh 9-month high as it breaks out above the low-to-mid-40’s…Mosolf SE & Co. AG, a significant European dealer of DynaCERT (DYA, TSX-V), is making a strong and strategic financial commitment to the company with the expansion of dealer operations across Germany and neighbouring European countries…as well, Dr. Joerg Mosolf, President and CEO of MOSOLF, has made an additional personal equity investment of $1 million…DYA, which got a big endorsement recently from Eric Sprott, is up 2 pennies at 54 cents…

5. Balmoral Resources (BAR, TSX) has commenced its largest ground geophysical survey in several years, targeting the Area 51 Gold system on its wholly-owned Fenelon Property in Quebec…Fenelon forms part of the company’s district-scale Detour Gold Trend Project…the IP survey now in progress will provide first-pass coverage of the untested Area 50 and Area 51 West exploration targets…it will also add to the existing IP coverage of the Area 52 target…the latter target area has been confirmed to host both the southern continuation of the Area 51 Gold system and Balmoral’s recent Ripley Zone Gold discovery…in total, Balmoral plans to complete a minimum of 46 line km of surveying…results from the initial phase of IP work at Area 52 proved effective for targeting both Area 51-style sulphide-rich and more “classic” shear zone hosted Gold mineralization, as evidenced by the Ripley discovery…BAR is up 2 pennies at 34.5 cents through the first 30 minutes of trading…key resistance is in the mid-30’s…

6. Infill drilling at Osisko Mining’s (OSK, TSX) Lynx deposit has returned the highest-grade metal factor (grade x length) result intersected at Windfall to date of 1,475 g/t Au over 4.6 m in hole OSK-W-19–1731-W2...this hole is 50 m up plunge of OSK-W-19–2069-W2 (161 g/t Au over 8 m as reported Nov. 25) and confirms the high-grade continuity in the Lynx 313 wireframe…the zone remains open down plunge and definition drilling will continue to pursue the open areas…the program is currently focused on infill and expansion drilling at the Lynx deposit, exploration on the main mineralized zones, and deep exploration in the central areas of the mineralized intrusive system…21 drills are active at Lynx and Triple Lynx, with another 3 drills conducting infill and exploration drilling on other areas of the deposit…President and CEO John Burzynski commented, “Today’s very impressive results again underscore that Lynx is a well-mineralized part of the Windfall system. Lynx, discovered by Osisko in late 2016, is shaping up to be one of the best new Gold discoveries in a long time in Eastern Canada. The recently announced Lynx bulk sample results and our infill drill program are demonstrating the strong continuity of grade inside the known mineralized zones, which remain open down plunge. Our exploration team is excited by the continuing potential of what we feel is an emerging world-class high-grade Gold deposit”…OSK is up 21 cents at $3.70 as of 7:00 am Pacific…

7. Paradigm Capital analyst David Davidson has commenced coverage of GT Gold (GTT, TSX-V) with a “speculative buy” rating and $2.10 share target…Davidson stated in a note, “With investors refraining from capital investment in low-moderate grade copper projects owing to fear of capital overruns and weak commodity prices, GT Gold offers a high-grade, high-quality project that we expect will offer profitable economics, regardless of the timing of the commodity cycle. We see optionality at Tatogga, which has the option to develop as an open pit, underground or a combination of both – the project could initially be developed as a small-scale open pit (and therefore smaller capex investment) if the commodity price down cycle persists, owing to current resource estimates of +1% CuEq. In the event of a commodity price upturn, the project offers several sources of expansion potential through unlocking deeper mineralization, lower-grade ore or expansion at different zones – specifically, Saddle North is GTT’s top priority, followed by Saddle South and the new target at Quash Pass”…

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Comments (2)

December 13, 2019

7 @ 7:00

Visit the BMR comments section throughout the day for updates and helpful information!

1. Gold has traded between $1,466 and $1,476 so far today…as of 7:00 am Pacific the yellow metal is up $3 an ounce at $1,472…Gold’s nearest resistance is in the high $1,480’s followed by $1,500…the bullish technical posture of many Gold producers suggests a breakout above $1,500 is in the cards for Q1…Silver is unchanged at $16.90…Palladium continues to run, up another $29 an ounce at $1,954…Nickel is the star among base metals this morning, climbing 14 cents to $6.31…an exceptionally strong support band stretches from $6 to $5.50 and that’s where Nickel appears to have bottomed in its 4th correction since a new bull cycle started in 2016…Copper is trading at its best levels since July, thanks to a thawing of U.S.-China trade relations…the metal is steady at $2.77 after trading higher earlier in the session…China consumes half the world’s Copper and the dispute with the U.S. has weighed on the market since early 2018…given its widespread use in industry, construction, transport and power distribution the metal is very sensitive to global economic conditions…Zinc has added a penny to $1.03 while Cobalt is flat at $15.65…Crude Oil has gained 17 cents a barrel to $59.35 while the Dollar Index has tumbled nearly half a point to 96.97…U.S. retail sales increased less than expected in November as Americans cut back on discretionary spending, which could see economists dialing back economic growth forecasts for the 4th quarter…the Commerce Department reported this morning that retail sales rose 0.2% last month…data for October was revised up slightly, but the November print was well below expectations of a 0.5% increase…

2. China is now holding a briefing regarding trade talks with the United States with word just out that the Chinese have agreed to the text of a trade deal…up until now, China had been quiet ever since news broke yesterday that the U.S. had agreed to a Phase 1 deal in principle…a notice to reporters a short while ago said China will discuss “issues on relevant progress of China-U.S. economic and trade consultation”…America’s initial trade pact with China “looks like a real breakthrough”, one expert says, marking President Trump’s 2nd victory this week on a key campaign promise (yet Democrats in the House, not focused on the priorities of taxpayers, are on the verge of impeaching Trump)…the Phase 1 agreement, which reportedly includes promises by Beijing to purchase $50 billion of U.S. agriculture, stronger intellectual-property protections and an end to China’s currency manipulation, will further cool the 21-month-long trade battle between the world’s 2 economic superpowers…the U.S. has agreed not to put 15% tariffs on $160 billion of Chinese goods on Sunday…“There’s a matter here that the Chinese may have given him so much that he doesn’t really want to embarrass them by making it all public so it may be a lower-level signing agreement, not him and President Xi and not some sort of long 20-page deal,” stated Michael Pillsbury, director of the Center for Chinese Strategy at the Hudson Institute, in an interview with FOX Business’ Lou Dobbs…

3. Socialists have been crushed in the UK (the U.S. is next, followed by Canada)…Prime Minister Boris Johnson will retain power with a thumping majority after his Conservative Party secured its best election result last night since 1987…with 1 seat still up for grabs, the Conservatives have secured 364 parliamentary seats, a majority of 78 in the House of Commons and a stunning victory for the Brexit cheerleader that paves the way for the U.K. Parliament to trigger a long-delayed split with the European Union…Labour’s at 203 seats, the worst result for the party since 1935, after offering voters a 2nd referendum on Brexit and the most radical socialist government in generations…Labour leader Jeremy Corbyn said he would step down…markets liked the results – the FTSE 100 has shot up 2% while sterling has strengthened significantly against the greenback…early today, President Trump promised to move quickly on talks for a new U.S.-U.K. trade deal…“Britain and the United States will now be free to strike a massive new Trade Deal after BREXIT,” Trump tweeted…“This deal has the potential to be far bigger and more lucrative than any deal that could be made with the EU”…

4. Canada Cobalt (CCW, TSX-V) has drilled into visually spectacular mineralization (massive native Silver and Cobalt) at Castle East, just 750 m from the old workings of the Siscoe (O’Brien) mine that churned out 41 million ounces of rich Silver in the prolific Gowganda Camp…assays from CCW’s first wedge hole, highlighted by 4.65 m of exceptionally high-grade mineralization given the extent of native Silver, are possible prior to Christmas…the Robinson Zone discovery, striking northwest-southeast and dipping to the south, is also within just 600 m of the past producing Capitol mine and 1.9 km from the Castle #3 Shaft…the vein shoot described by CCW in last night’s news release following an all-day trading halt matches the deposit model of this incredible district (Northern Ontario Silver-Cobalt Camp) that historically has produced over half a billion ounces of Silver, making it the most prolific primary Silver producing region in Canadian history as described by Peter Fancy in a riveting series of books (“Temiskaming Treasure Trails”)…the “low-hanging fruit” was picked off last century with more than 100 mines that made the region the birthplace of Canadian hard rock mining…however, modern exploration methods featuring new technologies are destined to discover a lot more deposits in an area with such impressive metal endowment, and Canada Cobalt is leading the way…it should come as no surprise, then, that a Kirkland Lake Gold (KL, TSX, NYSE) resource geologist – Matt Halliday – has switched teams to become CCW’s VP-Exploration starting this coming Monday…4 short wedge holes have been completed off CA-11–08 (1,194 oz/ton over 0.45 m within 3.1 m core length @ 189 oz/ton), giving geologists a clear understanding of vein orientation while extending the shoot to at least 15 m…CCW has just commenced a series of new drill holes from surface to build out the discovery and hit potential new vein systems higher up in the system and even further at depth – should be lots of news flow as drilling continues right up until Christmas and resumes during the first week of January…this discovery, interestingly, occurs in the lower middle portion of the Nipissing diabase around a vertical depth of ~420 m – the upper contact closer to surface and the Archean package should be very prospective, while the lower contact deeper down could feature very rich Silver and Cobalt as well…plenty of potential scale here – keep in mind that historically, just a single shoot in this district that extends for just 100 feet has yielded millions of ounces of Silver due to such unusual grades…CCW is off half a penny at 41.5 cents through the first 30 minutes of trading, but this is the type of news that typically has a lot of legs and will give fresh oxygen to the overall CCW uptrend into Christmas and month-end…

5. The Dow is 16 points higher through the first 30 minutes of trading…the S&P 500 has rallied 26% this year, on pace for its best annual performance in 6 years…the rally has been underpinned by pro-growth policies from the Trump administration and a dovish Federal Reserve which has cut interest rates 3 times this year to shore up growth, a sharp reversal after 4 increases last year…the central bank wants to see significantly higher and sustained inflation before raising rates again, meaning no more rate hikes are likely until at least 2021…in Toronto, the TSX is up 26 points…the Gold Index is back above 250, up a point at 251 – it’s just a matter of time before there’s a confirmed breakout above that key 250 level…the Venture is 2 points higher at 539 as it continues to prepare for a breakout through 540…in the Northern Ontario Silver-Cobalt Camp they measure Silver in kilos – elsewhere, it’s in grams…nonethless, Kootenay Silver (KTN, TSX-V) delivered a healthy result yesterday as it reported 415 g/t Silver over 11.5 m (true width) in drill hole CDH-19–030 at its Columbia Project (E and J veins) in Chihuahua state, Mexico…the intercept is within a new type of mineralization hosted within silicified breccias in close proximity to a district lithologic contact…the overall interval averaged 200 g/t over 25.85 m intercepting quartz veinlets and hydrothermal breccias across the J vein structure…GoGold (GGD, TSX) has just reported net income of $8.1. million (U.S.) on record revenue of $27 million for its fiscal year ending September 30 (net income included a gain on the sale of the Santa Gertrudis royalty of $11.8 million)…total precious metal sales were just over 1 million ounces of Silver and 8,752 ounces of Gold on record production of 1,781,080 Silver equivalent ounces, an increase of 37% from the prior year’s record…all-in-sustaining costs were $14.82 per Silver equivalent ounce (an average of $13.70 over the last 6 months)…GGD is unchanged at 61 cents…

6. The U.S. Army plans to fund construction of rare earths processing facilities, part of an urgent push by Washington to secure domestic supply of the minerals used to make military weapons and electronics, according to a government document seen by Reuters…the move would mark the first financial investment by the U.S. military into commercial-scale rare earths production since World War Two’s Manhattan Project built the first atomic bomb…it comes after President Trump earlier this year ordered the military to update its supply chain for the niche materials, warning that reliance on other nations for the strategic minerals could hamper U.S. defenses…China, which refines most of the world’s rare earths, has threatened to stop exporting the specialized minerals to the United States, using its monopoly as a cudgel in the ongoing trade spat between the world’s 2 largest economies…“The U.S. rare earths industry needs big help to compete against the Chinese,” said Jim McKenzie, CEO of UCore Rare Metals (UCU, TSX-V) which is developing a rare earths project in Alaska…“It’s not just about the money, but also the optics of broad support from Washington”…the Army division overseeing munitions last month asked miners for proposals on the cost of a pilot plant to produce so-called heavy rare earths, a less-common type of the specialized minerals that are highly sought after for use in weaponry, according to Reuters…responses are due by next Monday (Dec. 16)…UCore, Texas Mineral Resources (TMRC.PK) and a joint venture between Lynas (LYC, AX) and privately-held Blue Line are among the expected respondents, according to company officials…

7. The government of Ontario has announced it will abandon the current lottery system for cannabis retail and move towards an open licensing system beginning in January that will see the removal of a cap on the number of private cannabis stores across the province…the Alcohol and Gaming Commission of Ontario (AGCO), the provincial regulatory body that is in charge of the cannabis retail system, will begin accepting operator licence applications from prospective retailers on January 6, followed by store authorization applications on March 2, 2020, according to a Financial Post report this morning…store authorizations will be issued starting April at a rate of approximately 20 a month, similar to the pace in which Alberta awards cannabis store licences…“In response to the federal government’s decision to legalize cannabis, our government is determined to open the cannabis market as responsibly as possible,” said Attorney General Doug Downey…“We have said all along that opening more legal stores is the most effective way to combat the illicit market, protect our kids and keep our communities safe. That is our number one priority”…the announcement is bound to reinvigorate investor confidence in cannabis companies, which has been waning partly because of limited accessibility in Ontario that has, to date, just 24 stores…licensed producers, many of which have experienced declining revenues and are sitting on a pile of cannabis inventory, are banking on the creation of hundreds of new retail outlets to boost cannabis sales…

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December 12, 2019

7 @ 7:00

Visit the BMR comments section throughout the day for updates and helpful information!

1. Gold has traded between $1,470 and $1,488 so far today…as of 7:00 am Pacific the yellow metal is off $4 an ounce at $1,471…it firmed up yesterday following the final FOMC meeting of the year and then climbed further this morning until a tweet moments ago from President Trump who declared, “Getting VERY close to a BIG DEAL with China. They want it, and so do we!”...Gold’s nearest resistance is in the high $1,480’s, as demonstrated again this morning, followed by $1,500…Silver is now down 2 cents at $16.82 after climbing as high as $17.21…Palladium continues to surge, up another $22 an ounce at $1,918…base metals are getting support from a possible U.S.-China Phase 1 trade deal…Copper, trading at a 4.5-month high, is up slightly at $2.77…nearest resistance is the July high of $2.81…Nickel has advanced 6 cents to $6.24 while Zinc has added a penny to $1.02…Crude Oil has gained 68 cents to $59.44…OPEC says it now expects a small deficit in the Oil market in the next year, suggesting the market is tighter than previously thought – even before the latest pact with other producers to curb supply takes effect…the revised forecast by OPEC marks a further retreat from a prediction of a glut in 2020 as U.S. production growth begins to slow (perhaps only temporarily)…Crude Oil prices and energy stocks, often in lockstep, have split apart this year…as Crude prices have jumped significantly in 2019, Oil and gas stocks have mostly fallen…the Dollar Index has slipped nearly one-fifth of a point to 97.24…Conservative Prime Minister Boris Johnson is in a strong position to win a solid majority in today’s UK general election…the snap vote was called by the government due to parliamentary impasse over the Brexit deal he had negotiated with the EU…North Korea is asking for trouble…the rogue regime accused the United States of “hostile provocation” today for criticizing its ballistic missile tests during a United Nations Security Council meeting and warned that the Trump administration may have “blown its chance” to salvage nuclear negotiations…U.S. producer prices were unchanged in November, according to fresh data released this morning, as increases in food and gasoline prices were offset by declining costs for services, pointing to muted inflation despite a recent uptick in consumer prices…

2. Should the Federal Reserve be careful what it wishes for (more inflation?)…Fed Chairman Jerome Powell said yesterday that he’d prefer to let inflation rise and hold above the central bank’s target before considering future interest rate hikes, meaning there appears to be a lower threshold to reduce rates rather than to raise them…“In order to move rates up, I would want to see inflation that’s persistent and that’s significant,” Powell explained at his post-statement news conference…“A significant move up in inflation that’s also persistent before raising rates to address inflation concerns: That’s my view”…concluding a year that saw the central bank take down its benchmark rate 3 times, the FOMC met widely held expectations yesterday and kept the funds rate in a target range of 1.5%-1.75%…meanwhile, the Fed’s updated “dot plot” chart released yesterday showed that most central bank officials don’t expect the Fed will need to raise rates until 2021…

3. Canadian royalty and streaming company Triple Flag Precious Metals has cancelled its planned IPO, citing difficult market conditions, underscoring lacklustre demand for new issues in the mining sector…this would have been the biggest IPO in the sector in 2 years…Toronto-based Triple Flag, backed by hedge fund Elliot Management Corp., last month said it aimed to raise $360 million by selling 20 million shares at $15 to $18 each for a valuation of up to $2.12 billion…the company provides up-front financing to miners in exchange for future revenue or a share of production…the planned listing had been closely watched by investors…in a statement yesterday, Triple Flag said it had been encouraged by investor interest but that the environment for share offerings “continues to be challenging”…the company did not say when or if it would revisit markets…Triple Flag, led by a former Barrick Gold executive, holds royalty interests in Alamos Gold’s (AGI, TSX, NYSE) Young-Davidson mine in Ontario and Kirkland Lake Gold’s (KL, TSX, NYSE) Fosterville underground mine in Australia…lead underwriters for the offering included Bank of America Securities, CIBC World Markets and Scotia Capital…Triple Flag is the 2nd Canadian company to ditch plans for a public float in recent weeks…last month, waste management company GFL Environmental abandoned plans to raise up to $2.42 billion…

4. Shares in Aramco jumped on their 2nd day of trading to reach Saudi Crown Prince Mohammed bin Salman’s coveted valuation target of $2 trillion…in early trading today the Oil giant’s share price on Saudi Arabia’s Tadawul exchange rose 8% to 38.15 riyals ($10.30 U.S.), giving the Oil giant a market capitalization of $2 trillion…that was up from a $1.7 trillion valuation set during the company’s IPO, the world’s largest ever…the shares increased 10% on their market debut yesterday, hitting an upward limit set by the exchange…the increase in value is partly a function of the outsize impact that the company’s tiny 1.5% share float has on its valuation…it took only $300 million in shares traded yesterday to drive the value of Aramco up by nearly $200 billion…at a price of 38 riyals, Aramco’s 1.5% free float means shares owned by the public are worth $30 billion…

5. The Dow has shot up 208 points through the first 30 minutes of trading following President Trump’s tweet…an analyst at Credit Suisse says Apple’s iPhone sales in China fell sharply in November by 35.4% on a year-over-year basis…in Toronto, the TSX is up 62 points…the Gold Index quickly pushed as high as 254.52 in early trading until the Trump tweet and then backed off as Gold prices reversed – just a matter of time, however, before there’s a confirmed breakout above the key 250 level…the Venture is 2 points higher at 539 as it continues to prepare for a breakout through 540…as expected, Discovery Metals‘ (DSV, TSX-V) shareholders have passed a resolution approving 2176423 Ontario Ltd., a corporation beneficially owned by Eric Sprott, to become a control person…the conversion of Sprott’s subscription increasing to approximately 21%…Blue Moon Zinc’s (MOON, TSX-V) exploration partner, Australian-listed Platina Resources (PGM, ASX) has intersected massive and semi-massive sulphide mineralization in the 1st drill hole of this year’s program at the Blue Moon Zinc-Copper-Gold Project in Mariposa County…hole BMZ79 intersected 40 m of mineralization from 410 m (core length), approximately 30 m from the mineralized intercept in BMZ78…the 2nd hole is now in progress…Westhaven Ventures (WHN, TSX-V) is up a penny at 88 cents after falling 12 cents yesterday on the latest drill results (very respectable but not spectacular) from Shovelnose, highlighted by SN-19–26 which returned 42.8 m @ 2.6 g/t Au and 27.8 g/t Ag, including 15.46 m of 4.8 g/t Au and 61.2 g/t Ag in Vein Zone 1…Vein Zone 1 has been extended by 460 m to a total strike length of 1.3 km…the company has also staked an additional 21 sq. km on the northeastern border of the Shovelnose claim package…

7. Cannabis retailers in Ontario sold the most cannabis of any province in the first year following legalization, even though there was only one online store and 24 brick-and-mortar stores in operation for most of that period, according to new Statistics Canada data…Ontario accounted for $217 million in recreational cannabis sales, or 24% of the overall Canadian market, from October 2018 to September 2019, followed by Alberta and Quebec, which sold $196 million and $195 million worth, respectively…on a per capita basis, Alberta leads the way in sales – no surprise as they’ve reached out to the private sector more than any other province…the year following legalization saw more than 400 brick-and-mortar stores established across the country…total adult-use cannabis sales from online retail stores amounted to $908 million for that period, far short of many estimates prior to legalization…

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December 11, 2019

7 @ 7:00

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1. Gold has traded between $1,462 and $1,469 so far today…as of 7:00 am Pacific, the yellow metal is up $4 an ounce at $1,468…Silver is 4 cents higher at $16.67…Palladium, on a 13-session winning streak, is up $13 an ounce at $1,892…it zoomed past $1,900 for the first time ever yesterday as a power crisis halted production at mines in major producer South Africa, exacerbating concerns over supply and extending the autocatalyst’s record run…South Africa produces 40% of the world’s Palladium…Copper, looking much better these days, has added 2 pennies to $2.76…Nickel has rebounded 13 cents to $6.13…a strong band of technical support stretches from $6 to $5.50 as the metal bottoms in its 4th correction since 2016…Zinc and Cobalt are quiet at $1.01 and $15.65, respectively…Crude Oil has backed off 9 cents to $59.15 while the Dollar Index is relatively unchanged at 97.45…the Federal Reserve is expected to conclude its December meeting this afternoon by signaling it’s in no hurry to do anything to change its neutral stand on interest rates…the Fed releases its post-meeting statement at 11:00 am Pacific…no significant changes are expected from the previous statement but the Fed will release its interest rate forecast and latest economic projections at the same time, and it could show some improvement particularly after November’s increase in payrolls of 266,000…inflation remains muted…it was reported this morning that the U.S. Consumer Price Index rose 0.3% in November after a 0.4% rise in October…stripping out volatile food and energy prices, core inflation rose by 0.2%, in line with expectations…will there be an “eleventh hour” announcement about a U.S.-China trade deal on Saturday night?…more tariffs – 15% on about $160 billion in Chinese exports to the U.S. – are set to kick in on Sunday as both economies remain locked in negotations for a Phase 1 agreement…the Wall Street Journal has reported that both countries are taking steps to delay those tariffs…the European Central Bank will hold its first monetary policy meeting and news conference with Christine Lagarde as President tomorrow…polling shows that British Prime Minister Boris Johnson is on track to win a solid majority in tomorrow’s election…the main opposition Labour Party promises a new referendum on Brexit as well as renationalization of utilities and railroads in its most left-wing platform in decades…America’s liberal mainstream media strikes again – 16 year-old climate activist Greta Thunberg has become the youngest individual ever to be named TIME’s Person of the Year…TIME concluded, “She has succeeded in creating a global attitudinal shift, transforming millions of vague, middle-of-the-night anxieties into a worldwide movement calling for urgent change. She has offered a moral clarion call to those who are willing to act, and hurled shame on those who are not”…

2. Saudi Aramco, the world’s largest IPO, surged past expectations as it debuted on the country’s stock exchange this morning…shares of the state-owned Oil company rose to 35.2 Saudi riyals ($9.38) from 32 riyals in early deals in Riyadh, up 10% and hitting their daily limit…the price gives it a valuation of $1.88 trillion and makes it the largest listed company in the world, comfortably ahead of Microsoft and Apple…Aramco’s public debut, which listed 1.5% of its shares locally on the Saudi Tadawul, is the biggest on record – topping the $25 billion Alibaba raised when it went public in September 2014…the long-awaited IPO of world’s most profitable company forms the centerpiece of Crown Prince Mohammed bin Salman’s Vision 2030 program aimed at transforming the Saudi economy…the crown prince first floated the idea in 2016, stunning market observers by suggesting a head-spinning valuation of $2 trillion…that figure was brought down by financial advisors and banks earlier this year to a range of between $1.5 trillion and $1.7 trillion…

3. Chevron (CVX, NYSE) is writing down the value of its assets by more than $10 billion, a concession that in an age of abundant Oil and gas some of its holdings won’t be profitable anytime soon…in the largest write-down by an energy producer in years, Chevron said yesterday that it was cutting the value of a number of properties, notably its U.S. shale holdings in Appalachia, by a combined $10 billion to $11 billion…the company is also restructuring its operations to focus on fewer prospects in the face of persistently low natural gas prices, and will explore sales of some assets including its interest in the Kitimat LNG Project in northwest British Columbia…Chevron said it will keep its 2020 capital budget at $20 billion (U.S.), the 3rd consecutive year it hasn’t boosted spending…U.S. natural gas futures prices have slumped this year amid a supply glut, and are now averaging about $2.54 per million British thermal units…this could turn out to be the lowest average price for natural gas in any year since 1999…

4. Gold should benefit from continued “ultra-loose” monetary policy in 2020, rising to an average price of $1,550 an ounce in the 4th quarter of the New Year, Commerzbank says…Silver and Platinum are likely to ride the coattails of Gold higher, analysts said…however, the bank looks for high-flying Palladium to finally run into an “overdue correction” and push lower…Gold has backed down from its early-September high just shy of $1,560 an ounce, but still remains 14% stronger for the year, Commerzbank pointed out…this would be the best annual gain since 2010…“We envisage an increase to $1,550 per troy ounce by the end of 2020. The high optimism among speculative financial investors and the subdued demand in Asia will initially preclude any higher prices, so we expect to see the lion’s share of the upswing in the 2nd half of the year. Monetary policy pursued by the major central banks will remain ultra-loose. Admittedly, the U.S. Fed ruled out any further rate cuts. All the same, they are not entirely off the table, and are still more likely than rate hikes”…

5. The Dow is up slightly through the first 30 minutes of trading…companies are on track to raise more money through initial public offerings on NASDAQ this year than on the New York Stock Exchange, the first time that has happened since 2012’s bungled Facebook (FB, NASDAQ) offering…in Toronto, the TSX is up 51 points as Gold stocks push higher…the Gold Index is up 3 points at 248 – just a matter of time before there’s a breakout above the key 250 level…the Venture is a point higher at 538 as it continues to prepare for a breakout through 540…Barrick Gold (ABX, TSX; GOLD, NYSE) is well on its way to achieving its goal of raising $1.5 billion in cash as it sells its stake in another non-core asset…Barrick announced yesterday that it’s selling its 90% stake in the Massawa project in Senegal to Teranga Gold (TGZ, TSX) for $430 million…the stock-and-cash deal consists of $300 million in cash with $80 million worth of Teranga shares…Massawa is one of the highest-grade undeveloped open-pit Gold reserves in Africa…Teranga has also arranged a $140 million financing at $5.10 per share…investors have reacted positively to the deal…Teranga has eased off 17 cents to $6.02 in early trading after surging 56 cents yesterday on high volume…

6. This BEE keeps buzzing: Bee Vectoring Technologies (BEE, TSX-V) announced this morning that it has filed an international patent application for the latest version of its honeybee hive dispenser system that the company has tested and is bringing to market…“The agricultural industry is in the midst of a new green revolution, and the company’s more cost effective and highly targeted delivery systems will assist with the increased adoption of new biological compounds currently being developed to replace more chemicals,” stated CEO Ashish Mailk…this application strengthens the patent protection for the honeybee system by building on the previously filed application…the system is computer-controlled, enabling metered and uniform delivery of plant protection products to crops using commercial honeybees…this is the latest product addition to BVT’s natural precision agriculture system…patents are one of BVT’s key strategies to ensure legal protection as the company continues its post-EPA approval commercial expansion…“The cost to growers will be reduced as only minimal amounts of natural product is required, less than 1% of the amount used in conventional spraying, since bee vectoring enables the delivery of product to where it will do the most good, the blooms,” Mailk added…the new honeybee system is part of BVT’s growth strategy to increase its addressable market fully to include the entire estimated 2.5 million commercial bee hives in the U.S. and 91 million worldwide…leveraging both honeybee and bumblebee systems extends the company’s market reach of crops in all markets, which means the company can address 100% of the bee vectoring market for flowering crops…this includes high volume crops such as almonds, sunflowers and apples and high value crops such as blueberries, melons, strawberries and raspberries…BEE is up 2 cents at 43 cents as of 7:00 am Pacific…

7. Pan American Silver (PAAS, TSX, NYSE), which has been a superb market performer this year, has released an initial mineral resource estimate for the large polymetallic deposit discovered last year at the company’s La Colorada mine in Zacatecas, Mexico…the Inferred mineral resource totals 72.5 million tonnes, averaging 44 g/t Silver, 0.17% Copper, 2.02% Lead and 4.40% Zinc, assuming a cut-off value of $60 (U.S.) per tonne after accounting for transportation, smelting and refining costs…the deposit remains open in nearly all directions for resource expansion…“The initial inferred mineral resource estimate containing 102 million ounces of Silver and a large volume of base metals indicates the significance of this new discovery,” stated Christopher Emerson, Pan American’s VP for Business Development and Geology…“In just over a year since we first announced the discovery, we have completed 54,000 m of drilling into the deposit and developed the geological model for this initial resource estimate. An aggressive drilling program is planned for 2020 to further explore the deposit’s potential”…

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December 9, 2019

7 @ 7:00

Visit the BMR comments section throughout the day for updates and helpful information!

1. Gold has traded between $1,460 and $1,466 so far today…as of 7:00 am Pacific, the yellow metal is up $3 an ounce at $1,462…Goldman Sachs says the “strategic case is still strong” for investing in Gold and has reiterated its call for the precious metal to rise to $1,600 an ounce next year…“Overall, while we acknowledge the risks related to still-high Gold positions, we believe the strategic case is still strong, particularly for investors with long-term horizons. This is based on a deteriorated attractiveness of long term DM [developed-market] bonds as portfolio diversifiers and real return generation instruments, exposure to growing EM [emerging-market] wealth, limited mine supply growth, elevated political risks and a potential increase in debasement concerns sparked by rising airtime of Modern Monetary Theory”…Silver is 4 cents higher at $16.60…Copper has added 3 pennies to $2.72…China’s imports of Copper in November rose 12.1% on the previous month as an improvement in the manufacturing sector stoked higher demand for the red metal…Nickel remains under pressure (see below), off 8 cents at $5.98, while Zinc and Cobalt are both flat at $1.02 and $15.88, respectively…Crude Oil has backed off 37 cents to $58.83 after surging 7% last week on fresh OPEC-led production cuts…the Dollar Index has retreated one-tenth of a point to 97.59…Paul Volcker, the Federal Reserve Board chairman who vanquished the inflationary upsurge that sapped America’s global prestige and power in the 1970’s and early 1980’s, has died at the age of 92…

2. Saudi Arabia spearheaded a deal on Friday that will see OPEC and other allied producers (OPEC+) commit to some of the sector’s deepest output cuts in a decade (the U.S. comes out the big winner, plus Aramco investors – the largest of which is Saudi Arabia)…the Saudis, together with Russia, backed a plan that could see cuts of as much as 2.1 million barrels a day…the figures include an extra 500,000 b/d in cuts to take the OPEC+ target to 1.7 million b/d, or 1.7% of global demand, plus Saudi Arabia will continue to cut 400,000 b/d more than its quota…OPEC+, which includes more than 20 producers, pumps more than 40% of the world’s Oil…the group is taking action ahead of expected output increases next year by countries not participating in the cuts led by new top producer the United States…OPEC+ will meet again in early March to decide its next move…meanwhile, Prince Abdulaziz predicts that Saudi Aramco’s $1.7-trillion IPO valuation would soon soar above the level long coveted by his brother, Crown Prince Mohammed Bin Salman…“Aramco will be higher than the $2 trillion, and they can bet that this will happen,” Prince Abdulaziz said…the state-controlled company would reach that valuation “in a few months” after its shares start trading later this week, he added…

3. Investors are anxiously waiting to see whether a new round of tariffs on Chinese consumer goods takes effect next week, one of the few remaining hurdles for the broader equity markets in 2019…chances are the Trump administration’s December 15 deadline for new tariffs on China will be delayed while talks continue between the U.S. and China…despite fears that trade uncertainty would continue denting the world economy, activity picked up in the global manufacturing and services sectors last month, purchasing managers’ indexes show…many central banks have also slashed borrowing costs to support growth, and inflation is nowhere in sight thanks in part to continued low Oil prices…in the U.S., employers continue to hire at a steady pace (November was a banner month), bucking the mainstream view that tariffs would cause a sharp slowdown in the labor market…American consumers account for more than two-thirds of economic output and have shown few signs of limiting spending…

4. China’s exports in November shrank for the 4th consecutive month, underscoring persistent pressures on manufacturers from the Sino-U.S. trade battle, but growth in imports may be a sign that Beijing’s stimulus steps are helping to stoke demand…imports unexpectedly rose 0.3% from a year earlier, according to fresh data released yesterday, marking the first year-on-year growth since April and compared with a 1.8% decline forecast by economists…China’s trade surplus for November stood at $38.73 billion, compared with an expected $46.30 billion surplus in the poll and a $42.81 billion surplus recorded in October…meanwhile, China’s official factory activity gauge returned to growth for the first time in 7 months in November, with a private survey showing activity expanding at the quickest pace in almost 3 years…falling industrial profits and factory prices remain a concern, however…

5. Nickel is most of the way through a 4th major correction since a new bull market started in early 2019…$5.50 to $6.00 is the bottoming area based on our latest charts…the metal is once again being pulled in 2 different directions…a weak stainless steel market has been pushing Nickel prices down at the same time as increasing EV demand empties LME warehouses…a sharp fall in LME inventory threatens a repeat of the time-spread turbulence that rocked the London market during Q3…headline exchange inventory has fallen to 68,922 tonnes from 152,604 tonnes…moreover, 42% of that is awaiting physical load-out leaving a mere 39,588 tonnes of what the LME terms “live” tonnage…while Nickel may be on the electric vehicle investment grid because of its widespread use in Lithium-ion batteries (Nickel demand for EV batteries will ramp up significantly next decade), an old driver is reasserting itself – namely the state of the stainless steel market…demand for stainless steel, which accounts for most of the world’s Nickel usage, has been “depressing” everywhere but China, according to analysts at JP Morgan (“Metals Quarterly” Nov. 22, 2019)…the bank is forecasting that stainless steel production in the rest of the world will fall 1.7 million tonnes this year, a contraction of 7% and the sharpest year-on-year decline since 2009…production in China, however, continues to grow (12.6% in the first 9 months of 2019), and it’s outpacing demand growth at the moment…as a result, stainless steel stocks are building at China’s exchanges and along the broader supply chain, and prices have been falling…since launching in late September the Shanghai Futures Exchange stainless steel contract has dropped from 15,575 yuan per tonne to today’s just below 14,000…Chinese production margins have been negative almost the entire year, according to Goldman Sachs, but producers are caught in a “prisoner’s dilemma” and aren’t cutting production to balance the market because each fears losing market share if others don’t join in (“Metals: The ‘Prisoner’s Dilemma’ of China’s Stainless Steel Industry,” Dec. 4, 2019)…capacity utilization therefore remains high, as does demand for Nickel units, a big factor in its outperformance this year relative to its base metal peers…JP Morgan thinks the Chinese stainless steel stand-off is unsustainable and expects mills to start curtailing production into 2020, while Goldman Sachs is not so sure, arguing that only small high-cost producers will be washed out of the market…

6. The Dow is 35 points lower through the first 30 minutes of trading after strong gains to finish last week…in Toronto, the TSX is flat while the Venture – up in 10 out of the last 13 sessions – has added another 2 points to 540…the Index will accelerate to the upside on a breakout through 540…Kirkland Lake Gold (KL, TSX, NYSE) has acquired a 9.9% interest in Wallbridge Mining (WM, TSX), pursuant to WM’s mysterious $42 million private placement announced (and closed) on November 29…in addition, KL President and CEO Tony Makuch has joined WM’s board of directors…“We are excited to have Kirkland Lake as a strategic shareholder and we welcome Tony Makuch to the team as a member of the Board of Directors,” stated Wallbridge Chair Alar Soever…“Tony’s extensive experience in operations, resource development, capital markets and M&A will be very beneficial to all shareholders as we advance Fenelon toward production”…WM has pushed to a new high, up 6.5 cents at 85 cents as of 7:00 am Pacific…Wallbridge neighbor Balmoral Resources (BAR, TSX) has added a penny-and-half to 32.5 cents…Canada Cobalt (CCW, TSX-V), on the cusp of a potentially significant new high-grade Silver discovery in Northern Ontario, is up a penny at 42.5 cents near a fresh 9-month high…Gran Colombia Gold (GCM, TSX) has produced a new monthly record of 21,835 ounces of Gold in November, surpassing its previous best month in February earlier this year…this brings the total for the first 11 months of 2019 to 217,600 ounces, up 9% over the first 11 months of 2018…CEO Lombardo Paredes stated, “We are on track to finish the year in the upper end of our production guidance range of 225,000 to 240,000 ounces of Gold. Our mining operations at Segovia continue to deliver on expectations and, for the 2nd consecutive month, we have realized an improvement in the head grades at Marmato, setting us up nicely as we proceed with the spin-out of the mine to Caldas Gold as part of our initiative to unlock value in our Zona Baja mining assets at Marmato”…

7. Canopy Growth (WEED, TSX; CGC, NYSE) is pushing higher in early trading after news that Constellation Brands’ (STZ, NYSE) Chief Financial Officer David Klein has been appointed the new CEO of Canopy, approximately 6 months after former co-CEO and founder Bruce Linton was ousted from his role…Klein will take over from interim CEO and co-founder Mark Zekulin, who will be stepping down from his position effective December 20, according to this morning’s statement…“It has been an incredible 6 years at Canopy Growth, and I have witnessed the team and company grow from 5 people in an abandoned chocolate factory, to thousands of people across 5 continents,” said Zekulin…Klein stated, “Canopy Growth sits at the forefront of one of the most exciting new market opportunities in our lifetime. Thanks to the efforts of Mark and the entire team at Canopy Growth, no company is better positioned to win in the emerging cannabis market. I look forward to working with the team to build on the foundation that has been laid, to develop brands that strongly resonate with consumers, and to capture the market opportunity before us. Together we will drive sustainable, industry-leading growth that benefits employees, shareholders and the communities in which we operate”…

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